On Tuesday, December 11, House Budget Committee Chair Paul Ryan (R-WI) and Senate Budget Committee Chair Patty Murray (D-WA) unveiled a compromise budget deal that would eliminate $63 billion in automatic sequestration cuts to discretionary spending programs in fiscal year 2014 and 2015.  While a significant political breakthrough, the deal manages to reduce the total automatic sequestration cuts in those two years by less than half.

Budget Deal Cuts Farm Bill Funding

To pay for the removal of a portion of the sequester, but still have the same net impact on deficit reduction, the deal would extend sequestration cuts to direct (also known as mandatory) spending programs by two years.  This reduces spending by $28 billion, albeit not until 2022 and 2023.  The budget deal also generates new revenue by establishing new user fees for some government services, including conservation technical assistance.

The budget deal cuts over $600 million from farm bill mandatory conservation programs by extending sequestration cuts to 2022 and 2023.  Those cuts would otherwise end in fiscal year 2021, after having taken over $2 billion from farm bill conservation, assuming they are left in place that long.  Even larger cuts would be made to farm bill commodity program payments in those two distant years — taking cuts out of the very programs that farm bill conferees have been debating and massaging for many weeks now.

Additional Funding Cuts in Farm and Appropriations Bills

The additional $600 million in conservation program cuts are being made as farm bill conferees are finalizing a farm bill that will almost certainly make its own cut of at least $3 billion to the same mandatory conservation programs.  The budget deal also sets the stage for the completion of the fiscal year 2014 appropriations bills.  In the pending House and Senate agriculture appropriations bills, farm bill conservation programs are also further cut by several hundred million dollars, as an offset to pay for other competing priorities.

Conservation User Fees

In addition to extending these automatic sequestration cuts, the budget deal establishes an up to $150 user fee for farmers and ranchers who are accessing Conservation Technical Assistance (CTA) through USDA’s Natural Resources Conservation Service (NRCS).  Exemptions to the user fee would be given to beginning, limited resource, and socially disadvantaged farmers, to farmers needing assistance to qualify for an exemption from conservation compliance, and to farmers needing conservation plans to address federal, state, or local regulatory requirements.  While the new user fee would generate very modest savings of $4 million per year, it would almost certainly result in fewer farmers seeking technical help from NRCS to improve their soil and water conservation practices.  NSAC opposes the user fees.

Process Run Amok

Ironically, the savings generated by completion of a new farm bill would roughly match the mandatory spending savings generated by the 2014 budget deal.  Congressional and Budget Committee leaders had the opportunity to use these farm bill savings in their budget deal, with savings generated sooner rather than ten years from now.  Instead of taking that option, however, farmers and ranchers are now being asked to pay twice—once through the budget agreement and again through farm bill spending cuts—and potentially a third time if a grand bargain deficit reduction package ever comes back on the political landscape.

This is a very strange and nonsensical way to run a railroad.  There is a time-tested process for doing authorization bills in the midst of deficit reduction frenzies.  It is called budget reconciliation.  The budget deal gives the authorizing committees, in this case the Agriculture Committees, a deficit reduction number, and then lets the Committees develop bills that adjust policies to get to that number.  Instead of this logical process, we are now witnesses to a farm bill that is posed to make cuts that are not required by a budget deal, and a budget deal that makes further farm bill cuts that are not contemplated by the Farm Bill Conference Committee.

What’s Next – Appropriations

On the appropriations front, the budget deal provides for $1.012 trillion in total discretionary spending—roughly halfway between the Senate budget level of $1.058 trillion and the House budget level of $967 billion—in fiscal year 2014, which began on October 1.  This is $26 billion greater than the current discretionary funding level of $987 billion.  The additional funding is split in half between defense discretionary spending and non-defense discretionary spending.  The deal also provides for $1.014 billion in discretionary spending authority in fiscal year 2015.  Of the $63 billion decrease in sequestration, $45 billion would be applied to fiscal year 2014 and $18 billion to fiscal year 2015.

The House is expected to vote on the budget agreement this week, with the Senate to follow soon thereafter.   If the budget deal becomes law, the next step will be for the Appropriations Committees to allocate the new total discretionary funding levels between the various functions of government and attempt to put together an “omnibus” appropriations bill for fiscal year 2014 for Congress to vote on before January 15.  How much will go to the agriculture bill — and within the agriculture bill, how the vastly different funding programmatic levels between the House and Senate agriculture appropriations bills from earlier this year are reconciled — will be a project taking up a good chunk of time over the next several weeks.

What’s Next – Farm Bill

If the budget deal passes both houses and becomes law, the impact on farm bill proceedings may take a while to sort itself out.  There will clearly be impacts on farm bill spending and scoring, but the precise details of those impacts will not be known immediately.  How the Agriculture Committees, as the committees of jurisdiction, respond to the enactment of conservation user fees — something they did not at all consider in drafting the new farm bill — will also be a matter to watch.

You can download a section-by-section description of the deal here, or view a summary on the House Budget Committee website.